Entire Question
- What is the difference between PoW & PoS? Advantages & Disadvantages? Which one is better in scaling Capacity? Examples?
DIFFERENCE BETWEEN POS & POW
Here I think that is better to gain some knowledge about these two methods; Proof of Work and Proof of Stake before we talk about their differences. Because without a clear idea discussing differences is similar to finding something in dark without light. So that first I will arrange this article in a meaningful way.
Proof of Work
This Proof of Work method is some kind of consensus algorithm in the blockchain network, for simplicity we called this method "PoW" in short form. The process of this method is very interesting. Most of people know this PoW method as mining . There are several steps in this method, this is a process of verification and validating the transactions, recording data and information on ledgers, and creating new blocks to the blockchain. The people who involve these processes verify the transactions are called miners. This process solves so many complicated mathematical puzzles to validate the transaction. Relatively we can say that miners are low rewarded because they have to undergo several challenges because speed and high-quality hardware are a must to the above-mentioned process.
Proof of Stake
We can identify this method as a modified step in the consensus mechanism which used in blockchain networks. Simply we called this method "PoS". In this method, validators are chosen by using the quantity of stake they have. In this method, there is a high possibility to become a validator according to their stake or we can say the amount of stake is directly proportional to become a validator. Here we can see this method is totally inverse from the PoW method.
After getting some idea about these two consensus methods then we'll move into the differences which they have. For a better understanding, I'll make a chart to clear this topic.
Differences of two methods
| PoW method depends upon the speed and the quality of the hardware of the miners | PoS directly depends upon the number of stakes |
| The miners who solve the mathematical puzzles, get block rewards | In the PoS method, stakers get the network fee as a reward |
| Energy consuming and costly | Less energy is used and operating this method is not a costly process |
| PoW is a slow method | PoS is relatively fast when we considering the Proof of Work method |
| The main investment in PoW is hardware so that speed and solving chance everything depends on hardware | Staking is the main investment in PoS method so that to build the reputation in the blockchain will depend on the staked coin amount |
ADVANTAGE & DISADVANTAGE OF PoW & PoS
Proof of Work Method
Advantages of Proof of Work method
The primary advantage is that it provides us a solid mechanism and it prevents abuses and misuses
The most important fact is there is no need for any third person as an intermediary to validate the transaction.
This method depends upon computational capabilities so that we can this is a specific advantage.
Secure method because it has a mechanical process.
Disadvantages of Proof of Work method
This is a complicated process so that it requires so much time to solve mathematical puzzles for validating the transactions.
Comparing to the other methods it is a slow and high energy-consuming process.
To start this mining process is very costly because it needs high-quality equipment for the operation.
These method has scalability limitations that means during the transaction speed reduction will happen.
Cost of maintenance very high and high electricity consumption are the other disadvantages.
Proof of Stake Method
Advantages of Proof of Stake method
This method consumes less energy and low electricity is needed.
During transactions, it has more scalability.
Operating this method is not a big deal so that anyone can use this method after investing.
Transactions are cheaper and faster.
It will increase the stability of the blockchain and cryptocurrencies because PoS involves the staking of coins.
Disadvantages of Proof of Stake method
In this method security is not highly recommended because this is still a new system to the crypto world and it tends to be centralized.
Staked coins will be fixed for a period of time so that you have to wait for that specific period.
Rewards depend upon the staked amount therefore small investors will get a little reward.
You can't sell or stake the reward at the same time so you have to choose one option.
WHICH ONE IS BETTER IN SCALING CAPACITY
In crypto terminology "Scalability" is often used so that we have to get a simple idea about this before answer the other questions. Simply we can say that this is an index that shows the abilities or capabilities that the methods have and the other means of computing processes.
When we comparing the above mentioned Proof of Work (PoW) and Proof of Stake (PoS) methods then you can identify that PoS has more scalability than PoW because Proof of Stake can perform thousands of transactions in a second, faster than PoW by using less power.
- DASH
- NEO
- TEZOS
- Etherum
The above mentioned coins have already announced that they are shifting to the Proof of Stake method from the Proof of Work method. So that these are the best examples to prove that PoS has specific qualities more than the PoW method.
This is all about my homework post and I gain vast knowledge through this lesson.
Thank You!
@dulip